Interim Management Statement

RNS Number : 4064N
Riverstone Energy Limited
20 May 2020
 

Riverstone Energy Limited - Interim Management Statement

- Riverstone Energy Limited ("REL" or the "Company") is issuing this Interim Management Statement ("IMS") for the period from 1 January 2020 to 31 March 2020 (the "Period").

Highlights

· Key Financials (unaudited)

o NAV as at 31 March 2020  

$424 million (£344 million) [1]

o NAV per share as at 31 March 2020

$5.31 / £4.30 1

o Profit/(loss) during Period

$(347.7) million

o Basic profit/(loss) per share during Period

$(435.19) cents

o Market capitalisation at 31 March 2020

$144 million (£117 million) 1

o Share price at 31 March 2020

$1.80 / £1.46 1

 

· Total invested capital during the Period of $7 million in Onyx Power

· Total realisations during the Period of $39 million from Aleph Midstream S.A. ($23 million), Ridgebury H3, LLC ($8 million), and Castex Energy 2014 ($8 million)

· Total gross committed capital at 31 March 2020 is $1,449 million

· Total net committed capital at 31 March 2020 is $1,089 million or 92 per cent of net capital available 2

· Total net capital invested at 31 March 2020 is $975 million or 82 per cent. of net capital available 2

· On 1 May 2020, the Company announced a buyback programme with the intention of returning £50 million to shareholders via on market buybacks. Since the announcement, the Company has purchased 5,656,200 shares, in aggregate, for £13.6 million at an average share price of £2.40. Pro forma for these share buybacks, REL's aggregate cash balance is $194 million.

· Potential unfunded commitments at 31 March 2020 are $114 million, of which $41 million is not expected to be funded.

Richard Hayden, Chairman of Riverstone Energy Limited, commented:

"Energy markets saw historic declines at the end of the first quarter, with commodity prices and equities dropping dramatically as a result of the COVID-19 pandemic. Recognising the difficulties that REL is facing, the Board and Investment Manager are actively working together to support the portfolio's ability to navigate these challenging times as well as evaluate other ways to maximise value for shareholders." 

David M. Leuschen and Pierre F. Lapeyre Jr., Co-Founders of Riverstone, added:

"The first quarter of 2020 created unprecedented market conditions that were extremely difficult.  As COVID-19 led to significant commodity demand contraction, the potential for a Saudi-Russian price war also weighed on oil markets globally.  These dynamics severely impacted valuations in both the public and private markets. As we anticipate a period of continued volatility and uncertainty in the near-term, we are working real-time with each of our portfolio companies to reduce costs and capital expenditures as well as focus on liquidity until the macro environment stabilises."
 

Portfolio Update

Below is a summary of material activity in the portfolio during the Period. 

 

Onyx Power ("Onyx")

REL, through the Partnership, invested $7 million in Onyx.

Aleph Midstream S.A. ("Aleph")

REL, through the Partnership, received return of capital proceeds of $23 million from the unwinding of the commitment to Aleph.

 

Ridgebury H3, LLC ("Ridgebury")

REL, through the Partnership, received proceeds of $7 million from the sale of the Nalini D vessel and income distributions of $1 million.

 

Castex Energy 2014 ("Castex 2014")

REL, through the Partnership, received proceeds of $8 million from the sale of Castex 2014 to Talos Energy.

 

 

 

 

 

 

 

 

 

 

 

1Q20 Quarterly Portfolio Valuations and £50 million Share Buyback Programme

 

Previously, on 1 May 2020, REL announced its quarterly portfolio summary as of 31 March 2020, inclusive of updated quarterly unaudited fair market valuations:

 

 

Current Portfolio

 

Investment  (Initial Investment Date)

 

Target Basin

Gross Committed Capital  ($mm)

Invested

Capital ($mm)

Gross Realised

Capital ($mm)3

Gross Unrealised Value

($mm)

Gross Realised Capital & Unrealised Value ($mm)

31 Dec 2019 Gross MOIC4

31 Mar 2020

Gross MOIC4

Centennial   (6 Jul 2016)

 

Permian (U.S.)

$268

$268

$172

$4

$176

0.9x

0.7x

ILX III   (8 Oct 2015)

 

Deepwater GoM (U.S.)

200

155

5

104

109

1.2x

0.7x

Carrier II   (22 May 2015)

 

Permian & Eagle Ford (U.S.)

133

110

29

15

44

0.7x

0.4x

Onyx   (30 Nov 2019)

 

Europe

66

38

-

38

38

1.0x

1.0x

Liberty II   (30 Jan 2014)

 

Bakken, PRB (U.S.)

142

142

-

28

28

0.4x

0.2x

Hammerhead Resources  (27 Mar 2014)

 

Deep Basin (Canada)

307

295

23

1

24

0.4x

0.1x

Ridgebury  (19 Feb 2019)

 

Global

22

18

9

12

21

1.2x

1.2x

CNOR  (29 Aug 2014)

 

Western Canada

90

90

16

4

20

0.3x

0.2x

Fieldwood  (17 Mar 2014)

 

GoM Shelf (U.S.)

89

88

8

6

14

0.5x

0.2x

Total Current Portfolio5

$1,317

$1,203

$261

$213

$474

0.7x

0.4x

           

 

 

Realisations

 

Investment  (Initial Investment Date)

 

Target Basin

Gross Committed Capital  ($mm)

Invested

Capital ($mm)

Gross Realised

Capital ($mm)3

Gross Unrealised Value

($mm)

Gross Realised Capital & Unrealised Value ($mm)

31 Dec 2019 Gross MOIC4

31 Mar 2020

Gross MOIC4

Rock Oil6  (12 Mar 2014)

 

Permian (U.S.)

114

114

231

2

233

2.1x

2.0x

Three Rivers III (7 Apr 2015)

 

Permian (U.S.)

 94

 94

204

-

204

2.2x

2.2x

Meritage III7  (17 Apr 2015)

 

Western Canada

40

40

83

-

83

2.1x

2.1x

RCO8  (2 Feb 2015)

 

North America

80

80

79

1

80

1.0x

1.0x

Sierra  (24 Sept 2014)

 

Mexico

18

18

39

-

39

2.1x

2.1x

Aleph  (9 Jul 2019)

 

Vaca Muerta (Argentina)

23

23

23

-

23

1.0x

1.0x

Castex 2014  (3 Sept 2014)

 

Gulf Coast Region (U.S.)

52

52

8

2

10

0.4x

0.2x

Total Realisations5

$422

$422

$668

$5

$673

1.6x

1.6x

Withdrawn Commitments and Impairments9

121

121

1

-

1

0.0x

0.0x

Total Investments5

$1,860

$1,746

$931

$218

$1,148

0.9x

0.7x

Cash and Cash Equivalents

 

 

 

$211

 

 

 

Total Investments & Cash and Cash Equivalents

 

 

 

$429

 

 

 

           

Return of Capital

 

:

REL has 9 active investments spanning oil and gas, midstream, and energy services in the Continental U.S., Western Canada, Gulf of Mexico and Europe.

www.RiverstoneREL.com

For Riverstone Energy Limited:

Natasha Fowlie

Brian Potskowski

+44 20 3206 6300
 

 

 

[1] GBP:USD FX rate of 1.234 as of 31 March 2020

                       2 Net capital available of $1,186 million is based on total capital raised of $1,320 million, capital utilised for Tender Offer of $72 million, realised profits and other income net of fees,
                           expenses and performance allocation. The Board, with consultation by the Investment Manager, does not expect to fully fund all commitments in the normal course of business.

3 Gross realised capital is total gross proceeds realised on invested capital. Of the $931 million of capital realised to date, $639 million is the return of the cost basis, and the remainder is profit.

4 Gross Unrealised Value and Gross MOIC (Gross Multiple of Invested Capital) are before transaction costs, taxes (approximately 21 to 27.5 per cent. of U.S. sourced taxable income) and 20 per cent. carried interest on applicable gross profits in accordance with the revised terms announced on 3 January 2020, but effective 30 June 2019. Since there was no netting of losses against gains before the aforementioned revised terms, the effective carried interest rate on the portfolio as a whole will be greater than 20 per cent. In addition, there is a management fee of 1.5 per cent. of net assets (including cash) per annum and other expenses. Given these costs, fees and expenses are in aggregate expected to be considerable, Total Net Value and Net MOIC will be materially less than Gross Unrealised Value and Gross MOIC.  Local taxes, primarily on U.S. assets, may apply at the jurisdictional level on profits arising in operating entity investments. Further withholding taxes may apply on distributions from such operating entity investments. In the normal course of business, REL may form wholly-owned subsidiaries, to be treated as C Corporations for US tax purposes. The C Corporations serve to protect REL's public investors from incurring U.S. effectively connected income. The C Corporations file U.S. corporate tax returns with the U.S. Internal Revenue Service and pay U.S. corporate taxes on its taxable income.

5 Amounts may vary due to rounding.

6 The unrealized value of the Rock Oil investment consists of rights to mineral acres.

7 Midstream investment.

8 Credit investment.

9 Withdrawn commitments consist of Origo ($9 million) and CanEra III ($1 million), and impairments consist of Eagle II ($62 million) and Castex 2005 ($48 million).


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